SEC Proposes Amendments to Rule 10b5-1’s Affirmative Defense to Insider Trading Liability

On December 15, 2021, the Securities and Exchange Commission (the “SEC”) proposed amendments (the “proposal”) to Rule 10b5-1 under the Securities Exchange Act of 1934 (the “Exchange Act”) and related disclosure obligations for public companies. The proposal would (i) add new conditions to the availability of the affirmative defense to insider trading liability contained in Rule 10b5-1 that are designed to address concerns about abuse of the rule by issuers and insiders to trade securities on the basis of material nonpublic information (“MNPI”) and (ii) enhance public disclosure by issuers and insiders of such trading plans. This Legal Alert describes the proposal and discusses some practical considerations.